Grain SA warns wheat sector at risk after tariff ruling
Industry group says government’s decision to keep the current wheat tariff framework unchanged could weaken local wheat production and increase pressure on farmers.
SOUTH AFRICA – South Africa’s wheat producers have criticised the government’s decision to keep the current wheat tariff framework unchanged, warning that the move could weaken local wheat production and place more pressure on farmers already facing rising costs.
The dispute follows confirmation in the Government Gazette that the Dollar-Based Reference Price (DBRP) for wheat will remain at US$279 per tonne. Authorities also rejected calls for an automatic trigger mechanism that would speed up tariff adjustments.
Grain SA and the South African Cereals and Oilseeds Trade Association (SACOTA) had requested an increase in the reference price from US$279 per tonne to US$289 per tonne. The government approved neither request.
Grain SA Chief Executive Officer Dr Tobias Doyer said the outcome fails to reflect conditions on farms.
“We are not satisfied with this outcome, and we do not accept the reasoning on which it is based,” said Doyer. “The decision fails to reflect the reality on wheat farms across South Africa. Producers are under pressure from rising input costs, volatile markets, high financing costs, logistics challenges and unfair international competition.”
According to Grain SA, South African wheat farmers compete with producers in countries where governments provide direct and indirect support. The organisation argues that local farmers must absorb higher costs while competing against imported wheat sold into a market affected by subsidies and other forms of support.
The group also warned that the decision could affect wheat quality in the long term. Grain SA said local producers supply high-quality wheat valued by millers and processors, but farmers receive little reward for the extra costs involved in maintaining those standards.
“If quality is not valued and paid for, producers will increasingly be forced to reconsider their production strategies,” said Grain SA Chairperson Richard Krige. “If producers cannot be paid for quality, they will have no choice but to focus on yield and quantity simply to survive.”
Grain SA also expressed disappointment that the National Chamber of Milling opposed the tariff application.
“It is deeply disappointing that the very value chain that benefits from local wheat quality would oppose a measure aimed at keeping that production viable,” said Krige.
The organisation further criticised delays in the tariff system, noting that government acknowledged the problem but offered no immediate solution after 19 months of discussions. Grain SA said it will examine options to challenge the decision and continue discussions with government and industry stakeholders.
“The question is not whether South Africa can afford to support its wheat producers,” said Krige. “The question is whether South Africa can afford to lose them.”
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